Many CFOs aren’t happy with their Financial Planning and Analysis process, believing it delivers too little value and eats up too many resources. As a result, they often wonder what FP&A best practices they should follow. To date, the answers have been based on conventional wisdom, anecdotes and popular trends promoted by finance magazines. What’s been lacking is hard data… until now. Learn more about implementing efficient, cost-effective FP&A processes within your company.

What Is Enterprise Financial Planning and Analysis?

Enterprise Financial Planning and Analysis (FP&A) is a strategic function that supports an organization’s financial health by turning data into actionable insights. It encompasses financial planning, budgeting, forecasting, and analytical activities that help business leaders make informed decisions.

Modern FP&A goes beyond traditional finance by integrating financial, operational and external data (such as market trends) to build agile plans that align with broader business goals. By connecting strategic objectives to day-to-day financial performance, FP&A professionals help ensure the company remains competitive, efficient and well-prepared for the future.

Survey on FP&A Best Practices

The Institute of Management Accountants (IMA) and I developed a survey completed by more than 700 organizations around the globe. What made this survey different was the approach it took. Previous research focused on a particular methodology, then worked backward to find success stories.

The IMA survey focused on what the most successful organizations are doing differently from everyone else when it comes to FP&A. These successful organizations consistently meet or exceed their targets, and they consistently meet or beat their competition. It’s hard to think of a single executive who wouldn’t crave those results (which, by the way, guarantees their bonus).

These most successful organizations tell us that their Financial Planning & Analysis process:

• Drives shareholder value (or business value if privately held)
• Drives execution of the overall business strategy
• Ensures achievement of financial and operational goals
• Builds organizational awareness of the strategy and each department’s role in achieving it
• Optimizes resource allocation
• Ensures coordination of initiatives, projects, and programs

Again, what CFO, or CEO for that matter, wouldn’t want that? The question, though, is how these best-managed organizations were able to achieve these results. What’s in their drinking water?

Those are the questions the IMA survey set out to address, and the answers are illuminating. They are the subject of this series of blog posts called “12 Principles of Best Practice in Financial Planning and Analysis.” These are the principles we use at Board:

• #1: Translate Strategy into Actionable Plans
• #2: Identify and Gain Budget Approval for Required Resources
• #3: Connect Operations and the Financials
• #4: Analyze the Variance and Get the Story Behind the Numbers
• #5: Take Action When you Fall Behind on Your Financial or Operational Goals
• #6: Cascade Both Financial and Operational Goals Down to More Specific Targets
• #7: Hold People Accountable to Reach Better Financial Results and Link Them to Financial Incentives
• #8: Link Financial Incentives to Operational Goals
• #9: Identify What Drives Success in Your Business and Develop Measures for Those Drivers
• #10: Establish Short and Longer Term Targets for Business Drivers
• #11: Develop Initiatives and Projects to Achieve Business Targets
• #12: Monitor Business Results and Tie Them to Incentives

Financial Planning and Analysis Best Practices

There’s a lot to unpack. The best-run companies have a clear understanding of how operational improvements will drive financial results, and they focus just as much attention (if not more) on operational planning as they do financial planning. Successful FP&A professionals go far beyond financial planning and analysis basics, helping company leaders make wise decisions.

In the best-run companies, people are also held accountable for delivering specific operational and financial results. They know what resources they need to get those results, and after making their case, those resources are baked right into the budget and clearly identified. Is there more to it than that? Yes, a lot more, but like a compass, those fundamentals point to true north. 

How Do I Undertake Effective Financial Planning and Analysis?

After reading this blog series, you may feel that your organization has a long way to go before implementing FP&A best practices. You aren’t alone. The good news is that even small steps can make a big difference. Good luck on your personal journey to bring FP&A best practices to your organization. We’re here as a resource, so don’t hesitate to reach out and request a demo of The Enterprise Planning Platform.

You can also download a complimentary copy of A Complete Guide for Financial Planning and Analysis Best Practices.